In what executives hope marks a (small) turning point out of the deepest financial trenches of the pandemic, Hilton has announced that it lost $432 million in the second quarter.
The results are “not a shining moment” in the brand’s 100-year history, according to president and CEO Christopher Nassetta.
“Our second-quarter results reflect the challenges that our business has experienced as a result of the pandemic. However, as restrictions are lifting and properties around the world are reopening, we are seeing improved occupancy,” Nassetta said. “While we have a long journey in front of us, we are on the road to recovery and look forward to the opportunities ahead.”
When compared to 2019, revenue per available room (RevPar) dropped 81% year over year, a slight uptick from April’s low of 90%.
Hilton’s occupancy globally is roughly 40%, up significantly from a low of 13% in April. In China, occupancy is around 60%, while in the U.S. it’s about 45%. Globally, 96% of Hilton’s hotels are open for business.
“While those are still terrible numbers, there is a lot of improvement over a short period of time,” said Nassetta to investors. He also expressed optimism that leisure summer travel would continue into the fall as flexible work arrangements and remote learning might encourage leaving home. “It’ll be a grind up” to reclaim revenue, he said.
Those who are traveling are looking for deals. Although he didn’t mention ad spend, Nassetta said Hilton was using its marketing dollars to woo “lower-rated” leisure travelers—those willing to spend less than Hilton’s typical premium guests. They make up a “bulk” of travelers today and typically favor online travel agencies (OTAS), which Hilton has routinely asked customers to avoid with its Book Direct campaign.
“Whatever business is out there, we need to go after,” Nassetta said.
Still, Nassetta noted that Hilton’s own marketing channels have been more effective than OTAs. He also mentioned that the brand could get creative to bolster its business travel segment, including converting rooms into offices.
“Of course, we are looking at every opportunity towards how we utilize all of our rooms and public spaces in creative ways in order to supplement and find pockets of demand,” Nassetta said. “Sell them as offices, sell them as dormitories, all that flows towards room revenue.”
When asked if the suspension of house cleaning during a customer’s stay might become permanent to keep costs low, Nassetta was blunt: “Everything is on the table.”